The super-rich, ‘creative destruction’ and the middle class

September 28, 2012

Mike Lofgren spent 16 years as a Republican staffer and senior analyst for the House and Senate budget committees. In a recent American Conservative article he outlined the role of this nation's super-rich, both in the U.S. and the global economy.

Lofgren argues that today's corporate-driven Republican ideology "celebrates outsourcing, globalization and takeovers as the glorious fruits of capitalism's 'creative destruction.'" If millions of Americans are financially hurt, if not ruined, so be it, since this brand of capitalism is viewed by its adherents, notes Lofgren, as a "necessary outcome of scientific laws of economics that must never be tampered with, just as Lenin believed that his version of materialist laws were final and inexorable." Any opposition to this "globalized vulture capitalism" is immediately denounced as socialism.

From my perspective, labeling alternatives to corporate capitalism as socialist has been one of the most effective strategies used by the economic elite in this country. They have succeeded masterfully in linking their predatory capitalism with conservative Christianity (both are viewed as ordained by God) among the lower and lower middle-class Republican faithful. These most loyal and fanatic GOP foot soldiers are willing to see the last good-paying American job outsourced as long as the Republican Party maintains its ultra-conservative, political and social agenda (anti abortion and gay marriage, pro guns and school prayer, there's no such thing as global warming, and the earth is only 6,000 years old, for example).

For Lofgren, the primary objective of the "predatory super-rich and their political handmaidens" is to completely destroy the American nation-state and auction its resources to themselves. The super-rich will then create a "tollbooth economy, whereby more of our highways, bridges, parks and beaches are possessed by private oligarchs who will extract a toll from the rest of us." The privatization of those aspects of society, formerly in the public sector, will enrich the very few at the expense of everyone else.

The tollbooth economy is in line with the economic philosophy of Ayn Rand, who Paul Ryan noted "makes the best case for the morality of democratic capitalism." For Rand, the only proper services of government are "the police, the armed forces, the law courts." So you need a highway from Saranac Lake to Tupper Lake for your business? Build one with friends and relatives, or pay a toll to the company that constructs it for the rest of your life. Ditto for schools, water and sewage treatment, fire departments, airports, etc. For Rand, altruism was a "basic evil," and her writings are filled with references to those who advocate a tax system that funds government projects as "parasites," "moochers" and "looters." (At age 69, the two-pack-a-day-smoking Rand required surgery for lung cancer and didn't hesitate to accept Social Security and Medicare benefits.)

Mitt Romney shares this condescending view, stating that 47 percent of Americans "are dependent on government who believe they are victims ... who believe they are entitled to health care, to food, to housing, to you-name-it." Conservative New York Times columnist David Brooks noted that Romney "doesn't know much about the country he inhabits." Just who are these freeloaders, Brooks asks? "Is it the Iraq war veteran who goes to the V.A.? Is it the student getting a loan to go to college? Is it the retiree on Social Security and Medicare?"

Contrary to their professed deep religious convictions, Romney and Ryan are nothing more than heartless social Darwinists, cheerleaders for this latest generation of "robber barons." The real economic looters, as Ralph Nader points out, are the nation's 500 biggest companies that are "dependent on various kinds of corporate welfare: subsidies, giveaways, bailouts, waivers ... while many pay no tax at all on very substantial profits." Lofgren notes that defense contractors are far more dependent on taxpayer largesse than Romney's "fabled 47 percent."

The super-rich have no concern for the overall well-being of the United States, economic or otherwise.

"If one can afford private security," Lofgren states, "public safety is of no concern; if one owns a corporate jet, crumbling bridges cause less apprehension. ...With private doctors on call and a charted plane to get to the Mayo Clinic, why worry about Medicare?" Military personnel are viewed as "suckers from the laboring classes."

Nobel Prize-winning economist Joseph Stiglitz states that the cost imposed on American society by the wealthiest 1 percent is "the erosion of our sense of identity in which fair play, equality of opportunity, and a sense of community are so important." If Stiglitz is correct, the very essence of American society and what it means to be a hopeful member of this society - the realistic expectation and chance for upward mobility - is in jeopardy.

Some readers may be of the opinion that the disdain - if not outright contempt - the American super-rich have for the lower and middle classes, as outlined by Lofgren, is exaggerated. At some point, wages can't be lowered any further and job outsourcing must be halted, if for no other reason than a significant portion of the American population requires enough disposable income to buy the products and services U.S. corporations produce. For most of our history, that interpretation was largely correct. However, the global marketplace is changing rapidly.

Consider that in 2000, with a world population of approximately 6 billion people, about 25 percent of the global middle class was comprised of Americans. (Roughly 30 percent were Europeans and another 15 percent Japanese.) By the year 2050, with a projected global population of between 9 and 9.5 billion people, approximately 70 percent of the global middle class will reside in China, India and other Asian societies. The American middle class in 2050 will likely comprise no more than 3 or 4 percent of this global economic category.

Corporate America's increased sales to the non-U.S., global middle-class consumer is well under way. In 2010, for the first time in its over-100-year history, General Motors sold more cars and trucks in China than it did in this country. In 2009, China passed the U.S. as the world's largest car market. By 2015, car sales in China are projected to exceed those of the U.S., Germany and Japan combined.

The good news is that record Chinese sales generated 750 new jobs in GM's Flint, Mich., plant. Unfortunately (the bad news), this employment boost is a drop in the global automobile-production-jobs bucket. Ford recently announced it will spend $4.9 billion to construct eight new factories in China by 2015. GM plans to open approximately 600 dealerships in China this year and double the number of cars it builds in that country by 2016.

If creative destruction continues unimpeded, what will become of the American middle class by 2050? Can it survive as we know it? Or will the middle class be reduced, both in size and economic well-being, to a level from which it may never recover?

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George J. Bryjak lives in Bloomingdale, retired after 24 years of teaching sociology at the University of San Diego.